Abstract
Recent studies of the pattern of trade in Europe have provided substantial evidence in support of the hypothesis that trade liberalization among industrial countries increases intra-industry specialization.' This paper uses empirical evidence to test the applicability of this hypothesis to the manufacturing sector of less developed countries. According to the traditional textbook explanation of international specialization, a multilateral removal of trade barriers will cause a country to shift its resources from import-competing industries to exportoriented industries in which it has a comparative advantage.2 The country as a whole will thus be able to improve its efficiency of production, but it will have to bear the cost of reallocation or loss of part of its capital investment due to the expected decline of import-competing industries. This traditional interpretation of international specialization has
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